USCIS Capital Redeployment Policy Changes: How to Ensure EB-5 Investors Remain Compliant with EB-5 Program Requirements

In July 2020, United States Citizenship Immigration Services (USCIS) announced through a Policy Alert guideline updates for capital redeployment on EB-5 projects. The revisions, published in Volume 6, Part G, Chapter 2 of the USCIS Policy Manual (A(2)), clarifies the steps EB-5 investors must take when redeploying their investments. This also has significant implications for the regional centers and developers working with EB-5 capital.

The key components of the revised policy are:

  • Financial instrument purchases do not qualify for redeployment.
  • Redeployment dollars must be invested in commercial activities through the same new commercial enterprise (NCE) and in the same geographical area as the parent investment.

Learn how these changes potentially affect EB-5 immigrant investor visas.

Green Card Requirements and EB-5 Investor Capital through the Conditional Period

One of the basic requirements to secure permanent green cards for an EB-5 investor and their qualifying family members is maintaining an at-risk investment status through the period of conditional residency (usually two years). When evidence of meeting this and other requirements of the EB-5 program is presented through an I-829 petition filed within the last 90 days of the conditional residency period, the investor may be granted the removal of conditions on their green card.

EB-5 investor funds are released only after the conditional residency period is successfully completed. This period begins upon the issuance of a conditional green card and not upon the approval of the I-526 petition.

Where Capital Redeployment Fits into the EB-5 Immigrant Investor Program

Initially, loan or equity agreements involving EB-5 regional center investments were meant to be structured around the EB-5 visa processing timeline. Most were (and still are) created with five-year terms. Typically, the project investment roadmap begins with an NCE investing in a job-creating enterprise (JCE).

As EB-5 project investors have come to understand, USCIS processing times on single petitions have ballooned from a few months to more than a decade in some cases due to visa backlogs and retrogression, among other things. At this point, some investors are waiting 15 years before becoming permanent residents.

Because USCIS policy does not allow for capital to sit idly in an NCE’s account, the only option is to reinvest the funds. In other words, the capital must be redeployed to maintain the required at-risk status.

Avoiding Material Changes During EB-5 Capital Redeployment

Several redeployment criteria that must be met to avoid the USCIS red flagging an investment. Certain funding modifications may be viewed as material changes. To ensure that capital is not redeployed prematurely and viewed as a material change requires the following:

  • The original EB-5 investment was fully deployed, and all job-creation requirements were met.
  • Most, if not all, project goals outlined in the original business plan were achieved.
  • The original capital was returned (or at least made available to) the NCE for reinvestment.

Material changes generally include changes that vastly alter the scope of a project or affect the structure of funding an investment.

The July 2020 clarifications are the first of their kind on how investors can remain EB-5 compliant throughout the redeployment process. The policy now sets out where and when a redeployment can happen and what kinds of businesses and activities qualify.

Key Components of the Policy Update on EB-5 Capital Redeployment

Below is a summary and analysis of five key policy clarifications and their primary implications.

1. EB-5 capital must be reused for commercial activity. Financial instrument purchases and security investments do not qualify as meeting EB-5’s at-risk capital requirement. Therefore, redeployment into stocks or with a brokerage firm, for example, will put investors’ permanent green cards at risk.

2. EB-5 redeployments must go through the original NCE. The NCE that received an investor’s original capital must also be used for the redeployment of those same funds.

3. Redeployed EB-5 capital may be used for a variety of lawful business activities, provided these activities fall within the scope of the NCE. USCIS is proving quite flexible on qualifying commercial activities, and it may allow the NCE to adjust its scope by amending the original partnership and operating agreements.

4. New projects must operate within the same geographical area as the original. This has significant implications for regional centers and developers working with regional center sponsors.

Smaller regional centers should consider expanding their geographic coverage to provide more options for the redeployment of EB-5 capital. For example, if a regional center covers only three counties, all redeployments will have to occur in that three-county area. To expand the area a regional center’s license covers, the regional center operator would need to file a Form I-924 amendment. The regional center could then potentially extend its coverage to 20 counties instead, creating far more investment opportunities for investors and developers alike.

Additionally, project developers seeking regional center sponsorship should consider working with centers with a larger geographic footprint to ensure flexibility in what can sometimes amount to a 15-year endeavor with one or more redeployments.

5. EB-5 redeployments should occur within a year of funds recovery. USCIS is also demonstrating flexibility in this area for delays that are out of the hands of investors and other stakeholders. Depending on where an EB-5 investor is in the EB-5 timeline, these changes may bring about a need for quick action to alleviate any risk to their visas—especially when delays come about through no fault of their own.

Although it is the regional center operators and the developers who work with regional center sponsors that will feel the greatest impact of the redeployment policy changes, there are very real concerns for EB-5 investors themselves, as well.

Working with EB5AN to Expedite EB-5 Capital Redeployment

With 14 regional centers across 20 states, some extending through multiple states or covering entire states, EB5AN is a trusted partner and project sponsor. There are several benefits to working with EB5AN to reduce investors’ immigration risk:

  • Redeployment flexibility due to expanded regional center coverage
  • Expertise that leads to best-in-class fund management
  • Full project transparency and a dedication to EB-5 program compliance

The EB5AN team also has extensive experience in filing Form I-924 petitions and expansion amendments, with 150 USCIS approvals to date. We specialize in expansion applications for larger geographic areas.

Let us help you file your Form I-924 amendment as quickly as possible to ensure that your investors can remain compliant in the face of these latest updates, despite the current I-924 adjudication delays.

To learn more about how EB5AN can assist you with your specific EB-5 immigrant investor projects, contact us today!